Can local government help the next global startup? We think so

A recent episode of the ABC parody on government, Utopia saw CEO Tony Woodford, played by Rob Sitch, and his colleagues exploring what the role of government should be in supporting startups. Sitting on milk crates in the garage of the local startup, the bureaucrats eagerly asked the young entrepreneurs, “So, what can government do to support you?” to which they were met with puzzled looks and the delayed reply, “Umm… get out of our way?”, as if the possibility of seeking support from government had never crossed their mind.

Unfortunately, this sterotype and apparently mutually exclusive relationships between startups and government, is often not too far from reality.

A recent survey of Victorian startups Mapping Victoria’s Ecosystem found that only nine- percent had accessed local government support, and of those that had sought support, they tended to be more mature, well established and often sought out more traditional business and regulatory advice.

On the other side, discussions with local government stakeholders suggest a range of common barriers have regularly prevented them from engaging with startups. They point to an inability to talk the same ‘startup language’, for instance knowing the difference between an accelerator and an incubator, as well as needing help to understand what characteristics make a startup unique when compared to a small-business.

These, along with the ambitious behaviours often displayed by startup founders, suggests that until more recently, local governments may not have had the capability, confidence or common understanding to meaningfully engage their local startup communities.

However, things are changing and local governments in Victoria are starting to see the unique opportunity they have to support the next generation of startups through a focus on regional growth.

So, where does local government fit in the startup agenda? And why is this important for Victoria and Australia?

In the wake of globalisation and digitalisation, together with the end of the resources boom and the death of many traditional industries, the profile of Victorian and Australian business is shifting. Gone are the secure, stable jobs of yesterday, while the youth of today are finding it increasingly difficult to break into the workforce.

In their place, we have seen startups emerge as the lead contender to rebalance and grow the Australian economy of the future, replacing yesterday’s jobs, today.

As a precursor to Malcolm Turnbull’s ‘Innovation Nation’, the Chief Scientist’s Australian Innovation System Report 2015, showed the significant contribution startups make to the Australian economy. Viewed as ‘agents of change – through their ability to create opportunities for themselves and others’ and as the largest contributor to new jobs growth between 2006 and 2011, startups may be considered somewhat of an economic savior from within.

A similar view is held worldwide, with startups shown to be a massive contributor to economic growth and high value job creation over several decades.

Yet the makeup and distribution of Victoria’s startups within Victoria is unequal and key gaps in the ecosystem exist. The same ecosystem mapping survey showed that the majority (97 percent) of Victorian startups are concentrated in and around Melbourne, and further suggested a dearth of startups and startup-support outside of the CBD and major regional cities.

To address this gap and strengthen Victoria’s startup ecosystem we must focus on supporting a diverse, inclusive and connected startup economy, in which all regions of Victoria are able to play and benefit.

To do so will require a local, ‘place-based’ approach – to first strengthen and enhance the unique capability and offering of each region. We can then build the key connections within and across the broader ecosystem that will enable the regions to leverage the existing strengths of their metropolitan counterparts, thereby establishing a true ‘hub and spoke’ Victorian startup ecosystem.

This concept of a ‘place-based’ approach builds on the notion that those closest to the problem are often best placed to support the needs of the local community. This has long been remit of local government, who through their economic development functions have focused on promoting the economic interests of their local communities, facilitating key connections and business opportunities to strengthen their local regions.

The startup agenda should therefore be viewed as a natural evolution of local government’s role and innovation from within, with the opportunity to demonstrate to their communities a renewed purpose and relevance – that they get it and can innovate themselves.

At the same time, a commitment to supporting startups, for instance through the development of regional startup strategies and action plans would further position councils to accelerate the much needed regional growth and contribute to greater economic prosperity as an outcome of well-functioning inclusive and holistic Victorian startup ecosystem.

Victorian local government is keen and willing to drive this agenda. We are already seeing examples of this local leadership, for instance the City of Melbourne’s Startup Action Plan and Enterprise Geelong’s regional strategy, including neatly mapping of the entrepreneurial ecosystem GeeMAP.

We can also learn from other models, such as the region of Ipswich in Queensland, awarded the Innovation region of Queensland earlier this year and where the Ipswich City Council has recently been recognised as a national leader for the establishment of Fire Station 101, Australia’s first and only fully government-backed innovation hub.

While further away, we can learn from regions such as the traditional industrial town of Enschede in the Netherlands, where a commitment to a culture of entrepreneurship is part of the City’s core mission to rejuvenate the municipality, and has already resulted in the creation of hundreds of tech startups.

As Victoria’s startup economic development agency, LaunchVic has also demonstrated leadership to drive the local startup agenda by assisting our local governments to get started on their own startup journey.

Last Friday, Victoria’s #Startup Minister, the Hon Philip Dalidakis, launched the Startup guide and toolkit for local government, developed in partnership by LaunchVic and KPMG. This key resource has been developed with local government – for local government, to equip them with the tools and information they require to support their local startup communities.

Linked to launchVic’s latest funding round for local councils, this is an important first step in supporting those best positioned to accelerate startup activities in the regions, and if we are to build a more diverse and inclusive Victorian startup ecosystem.

The time is now to startup local governments and help them ‘get in the way’ for startup success.


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